Foreign Exchange Market Rules for Exports, Imports, Loans and Public Sector Operations (Communication A 1387)

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION "A" 1387
04/04/89

TO THE ENTITIES AUTHORIZED TO OPERATE IN FOREIGN EXCHANGE AND FOREIGN EXCHANGE BROKERS:

Ref.: Circulars Foreign Exchange Operations and Move- ments of Funds with Abroad CAMEX - 1 -
192. Active Operations OPRAC - 1 - 221.
External Collections and Payments COPEX - 1 - 157.
External Operations of the Public Sector SE-
PEX - 1 - 23.

We address you and through you all interested parties with reference to the provisions made known by Communication "A" 1340 of 20.2.89 and complementary ones, to bring to your knowledge that, with effect from the opening of the Foreign Exchange Markets corresponding to 5.4.89, this Institution, in accordance with the guidelines established by the economic authorities, has adopted the following provisions:

1. OFFICIAL FOREIGN EXCHANGE MARKET

The following concepts are settled through the Official Foreign Exchange Market:

1.1. 50% of the F.O.B. value of merchandise exports, and the same percentage for interest.

1.2. 50% of the F.O.B. value of merchandise imports, and the same percentage for interest, subject to the following:

1.2.1. Operations covered by documentary credits transmitted on 3.2.89.

For original maturities not extended and in force, cleared through customs. The obligation may be cancelled no more than two business days in advance of its maturity.

1.2.2. Operations not covered by documentary credits as of 3.2.89.

For original maturities not extended and in force, cleared through customs. They may access this foreign exchange market no earlier than 60 days from the date of customs clearance or the maturity of the originally agreed term, whichever is greater. The obligation may be cancelled no more than two business days in advance of its maturity.

1.2.3.. Unpaid operations not cancelled at their original maturities.

For original maturities not cancelled or extended corresponding to merchandise cleared through customs. Payment abroad may be made under the following conditions.

a) Operations of up to US$ 15,000 F.O.B. or its equivalent in other currencies and their interest.

• No earlier than 120 days from the date of this Communication or the maturity declared in the respective form 5020, whichever is greater.

b) Operations of more than US$ 15,000 F.O.B. and up to US$ 50.0OO F.O.B. or its equivalent in other currencies and their interest

• No earlier than 150 days from the date of this Communication or the maturity declared in the respective form 5020, whichever is greater.

c) Operations of more than US$ 50,000 F.O.B. and up to US$ 250.0OO F.O.B. or its equivalent in other currencies and their interest

• No earlier than 240 days from the date of this Communication or the maturity declared in the respective form 5020, whichever is greater.

d) Operations of more than US$ 250,000 F.O.B. and up to US$ 1.000.0OO F.O.B. or its equivalent in other currencies and their interest

• No earlier than 300 days from the date of this Communication or the maturity declared in the respective form 5020, whichever is greater.

e) Operations of more than US$ 1.000.000 F.O.B. or its equivalent in other currencies and their interest

• No earlier than 360 days from the date of this Communication or the maturity declared in the respective form 5020, whichever is greater.

1.2.4. Requirements to be met by the operations in points 1.2.1. and 1.2.2. above

Compliance must have been given to the Permanent External Debt Survey, in accordance with the provisions made known by Communication "A" 433 of 12.1.84 and complementary ones.

The intervening entity must have an External Auditor's opinion from the company that the obligation has not been cancelled or, as the case may be, within five business days following payment abroad.

In all cases the respective documentation must remain at the disposal of this Bank.

B.C.R.A. COMMUNICATION "A" 1387 04/04/89

1.2.5. Requirements to be met by the operations in point 1.2.3.

In the case of import operations unpaid as of 3.2.89 belonging to the private sector regardless of Form No. 5020 submitted in compliance with the provisions of Communication "A" 1343 of 20.2.89, the respective obligation must be declared in Form No. 5005 in accordance with Communication "A" 433 of 12.1.84 and complementary ones, subject to the extension periods provided in point 1.2.3. of this Communication. Likewise, for operations not declared in Form No. 5020 as of 31.3.89, such obligations may be submitted in Form No. 5005, with the supporting documentation of the operation attesting to the existence and validity of the debt, accompanied by Form No. 5009 (Application for Registration of Obligations with Abroad Declared Out of Time) and a copy of the External Auditor's opinion of the company confirming that the obligation has not been cancelled.

1.2.6. Verification of non-compliance with the provisions that enable payment abroad for merchandise imports shall give rise to the intervening entity proceeding with the immediate reimbursement of the funds transferred by the Official Foreign Exchange Market, which must be ceded to this Bank at the same exchange rate used for the transfer.

1.2.7. New operations entered into as from 7.2.89 inclusive covered by documentary credits or shipments made as from that date through any other payment instrument.

The formalization of these operations must comply with the following minimum periods for payment abroad, which may be effected no more than two business days in advance of their maturity, and comply with the provisions made known by Communication "A" 433 of 12.1.84 and complementary ones.

Merchandise in general, except capital goods.

The F.O.B. value may only be paid in installments of no less than 90 days counting from the date of shipment, including, as the case may be, the value of the respective financing interest.

Capital Goods:

The list of included products is detailed in the annex.

For transactions of up to u$s 500,000 or their equivalent in other currencies, the F.O.B. value may be paid at a minimum of 180 days from the date of shipment. For transactions greater than that amount, the minimum payment term shall be one year. Financing interest must be paid together with the principal installments.

For acquisitions exceeding u$s 500,000 or their equivalent in other currencies, advance payments prior to shipment of up to 5% of the FOB value of the purchase shall be allowed, and, in addition, upon delivery of the shipping documents, an additional amount may be paid to that which had been transferred for the aforementioned formalization, with which up to 15% may be totaled. In cases where this franchise is used, the import must be instrumented with a documentary credit, for an amount not less than the total paid up to the delivery of the shipping documentation, in which the amortization conditions of the balance being financed shall be stated.

For the making of advance payments, in the corresponding documentary credits it shall be recorded that the exporter must deliver the respective shipping documentation within the validity period of the credit and that, otherwise, it undertakes to reimburse the transferred amount within 10 days following the expiration of said period.

Excepted from these minimum conditions are imports that have financing granted by international or national credit organizations from abroad covering at least 85% of the FOB value, in which case the conditions established by the respective loan contracts shall apply.

1.2.8. Extensions of original maturities declared in Form No. 5005 in accordance with points 1.2.1., 1.2.2. and 1.2.6., must be reported by means of another Form No. 5005 in accordance with the schedule set forth in point 1.2.3. above, counting said periods from the date of this Communication. For this purpose, they must completely replace the form originally submitted.

1.3. Loans in foreign currency referred to in point 1.5. of Circular COPEX-1 and its complements, received to finance exports, up to the percentage indicated in point 1.2. above.

The cancellations of said loans and the payments of interest shall be processed through this market, in a percentage no greater than that admitted for the negotiation of foreign currency proceeds from exports at the time the payment is made.

The amounts entering as loans in foreign currency to finance exports must be negotiated simultaneously in the Official and Free Exchange Markets, in the proportions in force for the negotiation of foreign currency proceeds from exports.

1.4. Advance collections of exports up to the percentage indicated in point 1.1. above.

1.5. The refund of advance collections of exports and of loans in foreign currency entering through this exchange market, in accordance with points 1.4. and 1.5. of Circular COPEX-1 and its complements, up to the percentage in force at the time the refund is made, when the export has not been completed and in accordance with the provisions of Communication “A” 932 of 14.10.86.

1.6. The obligations of the public sector arising from the Guaranteed Refinancing Contract signed with the international banking community.

1.7. The obligations of the public sector arising from the Restructuring agreements entered into with official external creditors within the framework of the Paris Club.

Points 1.6. and 1.7. above do not cover operations of the financial public sector, of the private sector with guarantee of the Nation, of the provinces or municipalities and of mixed-economy companies, which are governed by the rules applicable to the settlement of private sector operations.

B.C.R.A. COMMUNICATION "A" 1387 04/04/89

1.8. Transfers abroad in respect of retirement and pension benefits to countries with which there is a reciprocity agreement in the matter, in accordance with current legal provisions.

1.9. Payments of the concepts considered by Communication “A” 1159 of 4.3.88 (expenses for medical treatment and purchase of medicines abroad), up to the amount authorized for each application individually considered. This exchange treatment covers submissions with certifications issued by the Ministry of Health and Social Action of the Nation or provincial or similar competent body in the matter.

1.10. Inflows of complementary funds from relending operations and capitalization of relending (does not include outflows for the same concepts).

1.11. 50% of the leasing of ships, aircraft or other goods, when they have rental contracts with option to purchase (“leasing”), and this has been irrevocably exercised.

1.12. 50% of the cancellations of principal and interest of loans from International Organizations that were applied abroad to the amortization of obligations for imports of merchandise.

2. FREE EXCHANGE MARKET.

All operations corresponding to concepts not included in point 1. above, as well as amounts exceeding the percentages that must be negotiated in the Official Exchange Market, as established in the aforementioned point 1, shall be settled through the Free Exchange Market.

The FOB value from exports of products of the following NADE positions: 71.07.02.01.00 and 72.01.02.01.00.

3. OTHER PROVISIONS

1. Operations of public or private sector entities that have the guarantee of the National, Provincial or Municipal governments, provided for in points 1. and 2. above, shall continue to be subject to the prior approval of this Bank in accordance with the provisions of Circular SEPEX-1-1-, Communication “A” 320 of 26.5.83 and complementary provisions.

2. The provisions on foreign exchange receipts and negotiation, endorsement of shipping permits and declaration of failure to receive foreign exchange (Form 1519) remain in force for export operations, regardless of the market in which the foreign exchange is negotiated. Failure to collect export proceeds on the due date of the obligation shall result in the freezing of the exchange rate for the portion corresponding to the Official Foreign Exchange Market.

3. Countertrade operations referred to in Communication “A” 925 of 30.12.85 may be carried out as long as the collections and payments for the products or services concerned are processed through the same foreign exchange market.

4. Foreign currency loans to finance exports (point 1.5. of Circular CO-PEX-1 and complementary provisions), received up to the close of operations on 31.3.89.

4.1. The amounts received through the Official Foreign Exchange Market may be settled through that same market until fully exhausted, up to the maximum amount settled through that market at the time of negotiation of the foreign exchange proceeds from the export.

If a balance remains that partially covers an export, it may be settled through the Official Foreign Exchange Market up to the maximum amount settled through that market at the time of negotiation of the foreign exchange proceeds from the export, and the remainder through the Free Foreign Exchange Market.

Interest derived from loans received as of 31.3.89 through the Official Foreign Exchange Market shall be settled through that same market.

For the settlement of the items listed below, the foreign exchange treatment applicable to exports of the goods that originated the financing at the time of settlement shall apply.

a. The amounts recorded by the Official Market as of 31.3.89 for foreign currency loans (point 1.5. of Circular COPEX-1 and complementary provisions) not applied to exports, under the terms of the last paragraph, subsection I, of Communication “A” 932 of 14.10.86.

b. The amounts recorded by the Official Market as of 31.3.89 for foreign currency loans (point 1.5. of Circular COPEX.1 and complementary provisions), when the export is not made and, consequently, they have not been applied within the maximum permitted periods, in accordance with the provisions set forth in Communication “A” 932 and complementary provisions.

c. The settlement of advance payments (point 1.4. of Circular COPEX-1 and complementary provisions) pending application as of 31.3.89 when the shipment of the goods is not made within the maximum established periods, in accordance with the provisions of Communication “A” 932 of 14.10.86 and complementary provisions, or for the amount admitted in accordance with the last paragraph, subsection I, of Communication “A” 932 of 14.10.86.

4.2. Loans received through the Free Foreign Exchange Market shall be settled through that market, as well as the respective interest.

B.C.R.A. COMMUNICATION "A" 1387 04/04/89

4.3. In all cases, strict compliance with the general provisions governing these financings must be observed.

Loans received in accordance with point III subsection 2 of Communication “A” 1340 of 20.2.89, and point 1. of Communication “A” 1345 of 21.2.89, shall be settled in accordance with the conditions established in those rules.

5. Foreign currency loans to finance exports (point 1.5. of Circular COPEX-1 and complementary provisions) may optionally be negotiated through the Free Foreign Exchange Market, through which the loan and the interest on the financing shall be settled and paid.

6. Transfers abroad for expenses in the importing country required for the construction of plants to be delivered “turnkey” or other works or industrial plants shall be settled with the same foreign exchange treatment assigned to the negotiation of foreign exchange proceeds from the export at the time the remittance is made. The total of transfers with the referred treatment may not exceed 15% of the F.O.B. value. Any excess, if any, must be transferred through the Free Foreign Exchange Market.

Expenditures to be processed through the Official Foreign Exchange Market must be previously consulted using Form 4008 C.

7. Communications “A” 1281 and 1340 of 4.1.88 and 20.2.89 and their complementary provisions, respectively, are revoked, except as indicated in point III subsection 2. of said Communication and point 1. of Communication “A” 1345 regarding the conditions for settlement of loans.

8. With regard to the information regime for foreign obligations (Permanent Survey of External Debt), the provisions set forth in Communication “A” 433 of 12.1.84 and “A” 461 of 8.3.84 and complementary provisions remain in force for operations covered by point 1.2. of this Communication.

In this regard, and with respect to the integration of sworn statements of external debt for merchandise import operations, 100% of the FOB value of the obligation and its interest must be declared, and the authorized entities shall be responsible for the total allocation of each declared maturity at the time of settling the corresponding portion through access to the Official Foreign Exchange Market.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Abelardo J. Tejada
Foreign Trade Manager
Julio A. Piekarz
Subgerente General

ANNEX

B.C.R.A.
LIST OF CAPITAL GOODS Annex to
Com. “A” 1387

	NADI Position				Exclusions (1)
(2) 44	23	00	99	00
(2) 68	11	00	00	00
73	21	00	00	00
73	22	00	00	00
73	37	00	00	00
74	09	00	00	00
76	08	00	00	00
76	09	00	00	00
84	01	00	00	00	02	98/99	00
84	02	00	00	00	02	00	00
84	03	00	00	00	02	99	00
84	04	00	00	00
84	05	00	00	00	02	00	00
84	06	00	00	00	02	00	00
					07	00	00
84	07	00	00	00	03	00	00
84	08	00	00	00	05	00	00
					06	00	00
84	09	00	00	00	00	02	00
84	10	00	00	00	02	01	06
					(3) 02	01	04
					(4) 02	01	07
					03	01	03 / 04
					(3) 04	01	00
					(5) 04	02	00
					05	01	06
					(6) 05	01	06
84	11	00	00	00	(3) 01	01	01
					(3) 01	01	02
					(3) 01	02	03
					01	02	11
					(7) 01	02	23
					(8) 01	02	99
					02	00	00
					03	02	00
					(3) 04	01	99
					04	02	00
84	12	00	00	00	00	01	01
					00	02	00
84	13	00	00	00	00	02	00
84	14	00	00	00	00	91	00
84	15	00	00	00	01	00	00
					02	00	00
					04	00	00
84	16	00	00	00	00	02	00
84	17	00	00	00	01	00	00
					02	01	02 y 04
					(3) 02	01	12
					(9) 02	03	21
					02	08	00
84	18	00	00	00	01	02	71
					02	01 y 04	00
					02	06 y 20	00
					03	00	00
84	19	00	00	00	01	00	00
					03	00	00
84	20	00	00	00	02	00	00
84	21	00	00	00	00	04	03 y 10
					00	05	00
84	22	00	00	00	01	02	01
					07	98 / 99	00
84	23	00	00	00	07	01-04/07	00
					07	10y98/99	00
84	24	00	00	00	05	00	00
84	25	00	00	00	05	00	00
84	26	00	00	00	03	00	00
84	27	00	00	00	02	00	00
84	28	00	00	00	02	00	00
84	29	00	00	00	02	00	00
84	30	00	00	00	02	00	00
84	31	00	00	00	03	04 / 11	00
					03	98 / 99	00
84	32	00	00	00	02	00	00
84	33	00	00	00	02	00	00
84	34	00	00	00	01	02	07 / 09
					02	01 / 06	00
					03	00	00
84	35	00	00	00	05	00	00
84	36	00	00	00
84	37	00	00	00	02	01	01
84	39	00	00	00	00	03 / 07	00

B.C.R.A.
SCHEDULE OF CAPITAL ASSETS Annex to
Com. "A" 1387

	NADI Position				Exclusions (1)
84	40	00	00	00	01	00	00
					05	00	00
					07	00	00
84	41	00	00	00	01	01	00
					02	00	00
84	42	00	00	00	00	04	00
84	43	00	00	00	01	02	00
					02	01	99
84	44	00	00	00	02	01	99
84	45	00	00	00
84	46	00	00	00
84	47	00	00	00
84	48	02	00	14
84	49	00	00	00	02	00	00
84	50	00	00	00	00	02	00
84	51	00	00	00
84	52	00	00	00	01	04	00
84	53	00	00	00
84	54	00	00	00
84	56	00	00	00	05	99	00
84	57	00	00	00	00	02	00
84	58	00	00	00	00	02	00
84	59	00	00	00	08	99	01
					09	00	00
85	01	00	00	00	01	01	02
					06	00	00
					08	04 / 05	00
					09	00	00
					10	01-03y99	00
					11	00	00
85	04	01	01	00
85	04	01	99	00
85	05	00	00	00	01	90	05 y 07
					00	99	00
85	07	00	02	00
85	11	00	00	00	01	3	00
					02	02	00
85	13	00	00	00	02	00	00
85	14	01	03	02
85	14	01	03	99
85	15	00	00	00	02	99	00
					03	99	00
					04	00	00
					05	00	00

B.C.R.A.
CAPITAL GOODS SCHEDULE Annex to
Com. "A" 1387

	NADI Position				Exclusions (1)
85	15	00	00	00	06	00	00
					10	01	03y98/99
					10	02 / 04	00
					10	05	01 y 05
					10	06 / 07	00
85	16	00	00	00	00	02	00
85	(10) 18	00	00	00
85	22	00	00	00	01	02	00
					02	99	00
86	01	00	00	00
86	02	00	00	00
86	03	00	00	00
86	04	00	00	00
86	05	00	00	00
86	06	00	00	00
86	07	00	00	00
86	08	00	00	00
86	10	00	00	00	00	03	00
86	01	00	00	00
87	01	00	00	00
87	02	01	03	00
87	02	02	00	00
87	02	03	00	00
87	03	00	00	00
87	04	00	00	00
87	07	01	00	00
87	14	02	01	01
88	01	00	00	00
88	02	00	00	00
88	05				00	03	00
89	01	00	00	00	02	01 / 02	00
89	02	00	00	00
89	05	00	00	00
90	09	00	00	00	00	01	99
					03	01	05
					03	01	08 y 16
					03	02	00
					03	03	00
90	12	00	01	01
90	(11) 16	01	02	99
92	11	04	01	01
92	11	04	01	02

B.C.R.A.
SCHEDULE OF CAPITAL ASSETS Annex to the
Com. "A" 1387

(1) - Comprises the last three pairs of digits of the corresponding NADI position.

(2) - Exclusively complete prefabricated constructions.

(3) - Only those intended for use in motor vehicles, self-propelled machinery and internal combustion engines.

(4) - Feed pumps for use in internal combustion motor vehicles.

(5) - Only those intended for use in internal combustion motor vehicles.

(6) - Only rotary fuel injection pumps for diesel engines.

(7) - Only those intended for use in motor vehicles and/or self-propelled machinery.

(8) - Only turbochargers intended for internal combustion engines.

(9) - Only those intended for use in motor vehicles and/or self-propelled machinery.

(10) - Only capacitors or condensers for medium and low voltage networks of more than 25 KVAR and 1 KVAR, respectively, and voltages above 600 Vac.

(11) - Ampoule inspection machines only.